The invention relates to an apparatus and method of trading electric energy between utility companies and others. Specifically, the invention is a software product that, when coupled to a communications network, creates a trading environment for the electronic purchase and sale of electric energy, the scheduling and usage of the transmission system, and the automated invoicing and electronic funds transfer for the settlement of transactions.
Electric energy is generated for public consumption by utility companies. Each utility company has a service area in which it enjoys near-monopoly status. The utility company is obligated to supply the electric energy needs of individual customers within the service area. Of course, the demand for electricity can vary according to a number of factors. In the long run, the demand for electricity is a function of the population and industries within the service area. In the short run, electrical demand varies according to many factors. Extreme weather, in particular, can significantly strain the generation capacity of the utility company.
An electric energy grid exists which connects each utility""s generating facilities to those of adjacent utilities. Each circle represents an individual utility company. Each line represents high-voltage lines which form the grid between the various utilities.
Electric energy is traded between utility companies and other market participants to meet shortfalls in capacity during unit outages, to achieve cost savings, or to increase revenues. xe2x80x9cBulk transactionsxe2x80x9d refers to the wholesale buying and selling of electrical energy. Typically, the parties involved in these trades are traditional electric utility companies. These companies wish to meet their obligations to provide reliable service to their customers in the most economically feasible manner. Often it is possible for a utility to purchase electricity from a neighboring utility more economically than it could produce it for itself. At other times, the power generator can sell excess generation at a price higher than its cost of generation.
To determine which trades are economic, utilities produce sophisticated forecasts of load (required generation) so that they can schedule their generators to run efficiently. The system dispatcher then determines if demand is likely to be over or under projections during various times of the day. The dispatcher is also interested in the associated cost with each level of generation. Even though the load forecasts are sophisticated, actual conditions usually deviate from them. This may be due to a number of circumstances, such as having generating units go off-line unexpectedly, differences between forecast and actual weather conditions, or changes in the price of available fuel to run the generators. All of these events affect the costs to produce electricity. Because of changes in these forecasts, the dispatcher telephones neighboring utility companies to determine prices and quantities of energy available for upcoming hours. These calls occur many times a day, sometimes hourly. At the same time, dispatchers for other utilities are also making phone calls. If the dispatcher finds what he considers to be a good deal, a trade is consummated. The result is that deals are often struck before the phone surveys are complete. It is rare for a dispatcher to call beyond his direct neighbors, and almost never farther out than two companies. This means that the opportunity for more economic transactions may have been overlooked simply because the dispatcher did not know about them.
A need exists for a system which creates substantial efficiency gains by automating this trading process over the current method of using the phone. This method of trading energy should allow utilities to simultaneously view real-time market prices and energy availabilities and to quickly consummate the best opportunities. The system should consider available transmission capacity, and calculate and schedule the least cost path for the energy. It should also report the transactions, invoice the participating parties, and facilitate rapid collection and disbursement of funds. Lastly, the system should allow for anonymous trading required of a true market.
The present method, also known as CPEX, establishes a nationwide electronic information system that assists buyers and sellers of electricity to conduct business by providing a common marketplace. CPEX is an easy to use windows-based software and hardware system that enables Participants to gather market information and make energy transactions decisions based on the best available opportunities. CPEX involves a software application, a computer and communications network, and a central server.
CPEX allows users to enter quantity and price information on energy that they have available to sell, wish to buy, or both. These offers are then sorted and presented to other CPEX Participants. These offers are sorted by lowest price to highest for purchase opportunities and sorted highest price to lowest for sale opportunities. Each Participant sees delivered price for purchases and total revenue for sales from its unique location in the electric grid. The purchase price of the energy is shown inclusive of any transmission charges, known as xe2x80x9cwheelingxe2x80x9d. Wheeling is a term used to refer to the transfer of electricity across a Participant""s transmission system. A Participant who provides wheeling services is referred to as a wheeler, and receives monetary compensation for providing this service.
CPEX also allows the buyers and sellers of electrical energy to offer different degrees of firmness for their energy. Interruptible energy may be curtailed, or cut off, for any reason. Non-interruptible energy may only be curtailed to avoid or remedy an unreliable condition. Both types of energy have a distinct market.
CPEX assists in maintaining the reliability of the electric grid by using a conservative method to schedule available transmission capacity. Each Participant maintains the amount of transmission capacity made available for CPEX transactions each hour. As transactions are consummated, this capacity is consumed and is no longer available for use by others. This helps assure that the transmission systems do not become unintentionally overloaded. Reliability is augmented by allowing simultaneous, electronic notification of all parties to a transaction upon a transaction""s curtailment. The current method of phone notification is inadequate when multiple parties are involved, as is common in buy/resell types of transactions.
CPEX provides monthly billing and Electronic Funds Transfer (EFT) services for payments and disbursements to all Participants as part of the basic CPEX package. This feature allows Participants to trade with more companies than they would otherwise and to manage their invoicing and collections with their current levels of staffing.